TSX New York markets plunge amid North Korea nuclear test concerns

TORONTO — North American stock markets experienced major sell-offs after investors returned from the Labour Day holiday weekend to weigh growing tensions between the United States and North Korea.Tuesday was the first day of trading since North Korea on Sunday conducted its most powerful nuclear test to date, triggering U.S. warnings of a “massive military response.”On Bay Street, the Toronto Stock Exchange’s S&P/TSX composite index plunged 101.45 points to 15,090.15 in a broad-based decline that saw nearly all sectors finish in the red.In New York, the Dow Jones industrial average nosedived 234.25 points to 21,753.31, the S&P 500 index lost 18.70 points to 2,457.85, and the Nasdaq composite index gave back 59.76 points to 6,375.57.“I think the bottom line today is we’re back to fuller trading volumes. We’ve come through the summer doldrums where volatility was quite light, where markets really didn’t do much,” said Andrew Pyle, a senior wealth adviser at Scotia Wealth Management.“I guess they’ve had a good run at ignoring a lot of the political and geopolitical risks facing the market.”While much of Tuesday’s focus has been the latest nuclear test announced by North Korea, Pyle said the markets are also starting to get a sense that investors are losing patience with Washington in terms of coming forward with a lot of the fiscal stimulus that has been basically built into this market since U.S. President Donald Trump’s election.“Now investors are starting to get a little anxious that we’re not seeing those promises that were delivered,” he said.“And I think with the volumes back in the market, now we’re seeing a truer depiction of the risks and how they affect the markets.”In currencies, the Canadian dollar was trading at an average price of 80.83 cents US, up 0.12 of a U.S. cent from last Friday.The loonie had surged nearly one cent US at the end of last week on news that the Canadian economy blew past second-quarter expectations with growth at an annual rate of 4.5 per cent.It is widely expected the Bank of Canada could hike its benchmark rate Wednesday for the second time in recent months when it unveils its latest decision on the key interest rate.In commodities news, the October crude contract was up $1.37 to US$48.66 per barrel, marking the third trading day in a row in which oil prices gained ground.“In the wake of Hurricane Harvey, demand for crude is picking up,” Pyle said. “It’s not a change in fundamentals, just a bounce from levels that were overly depressed.”Elsewhere in commodities, the December bullion contract advanced $14.10 to US$1,344.50 an ounce, the October natural gas contract was down 10 cents to US$2.97 per mmBTU and the December copper contract moved up one cent to US$3.13 a pound.Follow @DaveHTO on Twitter.